KEY POINTS:
More than $2 billion has been wiped off the value of the New Zealand Superannuation fund after global financial turbulence hit it hard during October.
The "Cullen Fund", which was set up by the Labour Government in 2003 as a means for providing for the future costs of retirement, had its worst monthly return in October since it began investing five years ago.
The 13.51 per cent loss plunged the fund's return on investment for the year to October 31 into its biggest yearly negative of 20.21 per cent.
That pushed its value down from $14.499 billion at the end of August to $12.025 billion at the end of October, wiping out the Government's annual contribution of $2 billion.
The fund's investment returns have now fallen to just 4.86 per cent per annum, more than 2 per cent below what it would have made if the money had been invested in the bank.
In a statement on its performance the Super Fund said like all diversified international investors it continued to experience exceptional turbulence in the global financial markets.
But it insisted that it was well prepared to withstand such issues.
"As a long-term investor, the fund is positioned to withstand such volatility and benefit from the investment opportunities that arise," it said.
A spokeswoman for the fund said it would not change its strategy despite the loss.
"We are monitoring the situation very closely. We are well aware of what is happening," she said.
But Michael Littlewood, co-director of the Retirement Policy and Research Centre who is opposed to the fund, said the latest figures were another reason to pause and think about the purpose of the fund and the risks it took by investing taxpayers' dollars.
Littlewood said the Government borrowed the $2 billion to invest in the Super Fund and no investor should be borrowing to invest in the sharemarket at the moment because the cost was higher than the return.
He believed the Government should consider stopping contributions. National has said it wants to double the fund's investment in New Zealand to 40 per cent.
